Willy Woo warns about bitcoin price
The renowned trader has a theory that the digital currency could fall to "fill a gap
Key facts:
According to Woo's calculations, most of the CME 'gaps' have subsequently been filled.
If the statistical rule is met, bitcoin would seek $39,700.
Trader and analyst Willy Woo has issued a warning about the price of bitcoin (BTC), suggesting the possibility of a significant correction to “fill a gap” on the Chicago Mercantile Exchange (CME).
«According to my calculations, 28 of 30 gaps have been filled in the CME daily candlesticks (93%)» says the specialist.
To understand this, it is important to explain several things. The first thing is that the CME is a traditional exchange that allows trading of bitcoin futures during business hours and only from Monday to Friday. However, as we know, BTC has no trading schedule.
That is why some price gaps occur between the closing time and the new opening time. Trading theory says that the price of an asset, in this case bitcoin, tends to close these gaps.
In technical analysis, some traders pay special attention to gaps because this means that the price will eventually retrace to cover or fill the gap, as Woo explains. This would bring the price of the asset back to the level it was at before the gap formed.
In the following image you can see the gaps as empty points on the price graph highlighted in two yellow circles.
Based on the above, Woo believes that bitcoin could head to $39,700 in search of balance. If it were to happen at this time, it would mean a drop for the digital currency of 8.2%, whose current price is $43,251.
It is important to note that although there is an observable tendency for gaps in bitcoin to fill, this is not a fixed rule and there are times when gaps remain open for prolonged periods
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